Telangana, AP among five states that completed stipulated Ease of Doing Business reforms

According to the ministry, the ease of doing business is an important indicator of the investment-friendly business climate in the country. Improvements in ease of doing business will enable faster future growth of the state economy. Therefore, the government of India had, in May 2020, had decided to link the grant of additional borrowing permissions to states that undertake reforms to facilitate ease of doing business.

Linking the grant of additional borrowing permissions by the Union government to the states to reforms in various citizen-centric sectors has motivated the states to undertake reforms to promote ease of doing business. These states have been granted permission to mobilise additional financial resources to the tune of Rs. 16,728 crores through open market borrowings. These states are Andhra Pradesh, Karnataka, Madhya Pradesh, Tamil Nadu, and Telangana.

Andhra Pradesh has given Rs. 2,525 crores while Telangana is given Rs. 2,508 crores. Also, Rs. 4,509 is disbursed to Karnataka, Rs. 4,813 to Tamil Nadu, and Rs. 2,373 to Madhya Pradesh.

In view of the resource requirement to meet the challenges posed by the COVID-19 pandemic, the Central government had, on 17 May, enhanced the borrowing limit of the states by two per cent of their GSDP. Half of this special dispensation was linked to undertaking citizen-centric reforms by the states. The four citizen-centric areas for reforms identified were implementation of 'One Nation One Ration Card' system, ease of doing business reform, urban local body/utility reforms, and power sector reforms.

So far, 10 states have implemented the 'One Nation One Ration Card' system, five have completed the ease of doing business reforms, and two have implemented local body reforms.

Besides additional borrowing permissions, the states completing three out of the four reforms are entitled to get additional financial assistance under the 'Scheme for Financial Assistance to States for Capital Expenditure'. Under the scheme, an amount of Rs. 2,000 crores is earmarked for this purpose.

To facilitate more states to undertake the reforms and avail additional borrowings, the department of expenditure of the ministry of finance had recently extended the deadline for the states to complete citizen-centric reforms in various sectors. Now, if the recommendation from the nodal ministry concerned regarding the implementation of the reform is received by 15 February 2020, the state will be eligible for reform-linked benefits.